I prefer not to discuss child massacres this morning: Here is what else is happening today:

• Paul Lim: The Economy and Stocks: A Big Disconnect (NYT)
• So, apart from the roads — which go without saying — the aqueduct, sanitation, irrigation, medicine, education, wine, public baths and public order — what have the Romans ever done for us? (FT Alphaville)
• Pop Goes the Art Bubble (Daily Beast)
• 17 Things I Learned From Reading Every Last Word of The Economist’s “The World in 2013” Issue (The 6th Floor)
• Five myths about tax reform (WaPo)
• Obama to Run Most Health Marketplaces as States Opt Out (Bloomberg)
• Lie of the Year: the Romney campaign’s ad on Jeeps made in China (PolitiFact)
• Apple, Google, Amazon, And Facebook Have Declared World War 3 (Business Insider)
• Why People Believe Weird Things and 8 Ways to Change Their Minds (PSY Blog)
• Spoof plan to make Montreal dogs bilingual fools ‘New York’ magazine, ‘Raw Story’ (Daily Caller)

What are you having for brunch?

Only 10 Companies created 88% of S&P500 Earnings Growth in 2012click for larger graphic
Source: Barron’s

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “10 Sunday Reads”

this graphic and ‘Earnings Growth’ got me going .. corporate level growth – whats so good about that – unless its a trade vehicle .. perfection of production = built cheapest with employee welfare in mindset, sold at break even (borrow for needs from the finance eco sys), while doing no harm to the financial stability of its locales; and not in the least the other eco sys (mother nature)

I understand why winning elections are so important – power of the dole – because everyone knows taking on a supercorporation is .. well (a deep subject)

I like the chart, but how has this metric changed over time? Do a handful of companies typically account for the vast majority of earnings growth? Also, wouldn’t the trend in the top 10 largest companies heavily influence the trend in S&P earnings growth/decline (i.e. mathematically…since it is weighted by size)?

“…Sixty-five percent of Americans say Obama’s Nov. 6 election victory gave him a mandate on his proposal to raise tax rates on top earners, according to a Bloomberg National Poll of 1,000 adults conducted Dec. 7-10…”

The GOP should stand firm. Having 35% of the vote in Mississippi, Alabama, West Virginia and Wyoming will be great for them. They can all move their and celebrate their ideology

“CIA agents tortured a German citizen, sodomising, shackling, and beating him, as Macedonian state police looked on, the European court of human rights said in a historic judgment released on Thursday.

In a unanimous ruling, it also found Macedonia guilty of torturing, abusing, and secretly imprisoning Khaled el-Masri, a German of Lebanese origin allegedly linked to terrorist organisations.

Masri was seized in Macedonia in December 2003 and handed over to a CIA “rendition team” at Skopje airport and secretly flown to Afghanistan.

It is the first time the court has described CIA treatment meted out to terror suspects as torture.”

Nice to know that our tough guy CIA agents are willing to sodomize an innocent and defenseless man in order to protect the US of A. ‘Mericuh. Wish they would consider doing to it to someone who is demonstrably guilty, like Richard Cheney, who conspired with others to out a covert agent of, yeah you guessed it, the CIA.

Of course, old news, and boring, that’s why we never talk about WWII…who cares about torture, it’s not like they would do that to an American citizen…

Menzie Chinn goes to the trouble of proving, in detail (need to follow some links to see all of it), that the state of economic analysis at Heritage Foundation is primitive, incoherent and almost completely incorrect (or so wildly off-base it isn’t even wrong) but since the purpose of Heritage has little to do with veracity or verisimilitude and much to do with supplying arguments for reactionary policies it was an effort wasted on Heritage and its adherents. As one commenter points out:

“The people who take Heritage Foundation stuff seriously (e.g., my Republican US Senator) would not even understand the meaning of the partial derivative notation never mind dynamic (i.e., intertemporal) New Keynesian models. …Heritage Foundation provides a veneer of serious sounding policy analysis. It allows Republican politicians …to point to some Heritage “study” as evidence supporting some kooky view. …in Heritage Foundation land it’s forever 1979. The economy is always at full employment. Inflation is always on the cusp of going Weimar. And marginal tax rates are always far to the right of the Laffer peak. A policy position for all seasons.”

The scary part about the 10 companies providing most of the 2012 profit growth is that most of that growth is in the financial sector. This thing isn’t done until 80%+ of the growth is in the non-financial sectors.

Where is the creativity that will likely be required to get real agreements that work long-term? For example, higher capital gains rates (say at the marginal tax rate) but providing for indexing the cost basis for inflation. This would encourage long-term investment. These types of offers could potentially allay the need to raise the top marginal rate which is already fairly high, especially compared to captial gains and dividend tax rares while allowing both parties to move beyond talking points.

Since myths, and why people believe them in spite of contrary evidence, is a common theme in these readings, I would like to recommend “Why People Believe Weird Things: Pseudoscience, Superstition, and Other Confusions of Our Time,” by Michael Shermer. It was originally published in 1997, but remains completely relevant.

Why does anyone pay any attention to PolitiFact? Sure, what Romney said about shifting Jeep production was a shameless lie, consider that PolitiFact proudly lists the claim that the Republicans voted to do away with Medicare as the biggest lie of the previous cycle.

Did the Republicans vote to eliminate the name “Medicare”? No. They voted to eliminate the Medicare as a defined benefit program. In other words, you know what you pay in and have no idea what you get back out. This was not a Democratic scare tactic. It is what the Center for Budget Policies and Priorities and every other responsible commentator said:

the Ryan plan would gradually replace traditional Medicare with a system of cash-vouchers, which seniors and persons with disabilities could use to help them to purchase private health insurance coverage. While this would save the government money, it would do so by shifting large health care costs onto seniors.

The Congressional Budget Office has estimated that when this program goes into effect in 2022, a typical 65-year-old, who would now be in the new system, would have to pay about $12,000 out-of-pocket for his or her health care spending rather than just about $6,000 as would be the case if traditional Medicare were to continue.

This is very, very different than what Medicare is now. So, for PolitiFact to label the claim that the GOP was doing away with Medicare a “lie” was itself a lie.

So, rah. PolitiFact called out one lie among many that Romney told. But they are libeling the word “fact” by continuing to use it in their name. They are a bunch of gutless weathervanes, doing their best not to be accused of political bias by trying to come up with an equal number of lies on both sides, even if that means calling the truth a lie.

While they dithered over spending, members of Congress found time on Dec. 5 to settle a less urgent matter: purging the word “lunatic” from the federal law books. The government precisely defines the terms it uses in laws, and since 1947 the first paragraph of the federal code has described insanity this way: “the words ‘insane’ and ‘insane person’ and ‘lunatic’ shall include every idiot, lunatic, insane person, and person non compos mentis.” At the urging of psychologists, who argued the definition is outdated and offensive, Congress voted to strike the word from the code. The rest of the language remains as is. So, according to U.S. law, the mentally ill can no longer be called lunatics. They can, however, still be called idiots.

Interesting … of the ten companies, three – $AAPL, $IBM and $WDC – are in the IT industry and one – $GE – is an industrial conglomerate. The rest are financial businesses, most of which were bailed out by the taxpayers and most of which achieved their “earnings growth” via massive “layoffs”. There isn’t a transportation company in the list. There isn’t an energy or health care company in the list.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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